Overview

In 2008, the North Sea region produced 21.9 million barrels of oil equivalent (MMboe), approximately 11 percent of Apache’s total production, generated slightly more than $2.1 billion in revenue and accounted for approximately 8 percent of company estimated year-end proved reserves.

Apache invested $459 million on drilling and workovers along with facility enhancement projects. We drilled 14 wells, 12 of which were producers, and performed 25 workovers. A number of key projects were completed and commissioned. Foremost among these was the reconfiguration of the production import header on Charlie platform. Instabilities in the old system were responsible for numerous disruptions termed, “cease exports” (i.e., short-duration field shutdowns). Through March 31, Forties operated for 195 consecutive days without a cease export, a significant improvement from averages of 10 days in 2006, 16 days in 2007, and 33 days for 2008.

The region also completed expansion of high-pressure gas-lift compression projects on the Alpha and Delta platforms, a large produced water reinjection system on the Charlie platform and replacement of the infield pipeline between the Bravo and Charlie platforms. Investments in facility upgrades and integrity-related projects over the past five years have significantly improved the field’s uptime efficiency.

Apache’s exploration drilling at Forties has focused on the Central Graben, Moray Firth and Viking Graben regions. Eight exploration wells and four appraisal wells resulted in oil discoveries at Bacchus, NW Bravo, Phoenix and Polecat. Pre-development studies are in progress for the Bacchus discovery and additional appraisal drilling will be required at Phoenix and Polecat to determine their commerciality. Current exploration focus is near-Forties Jurassic oil targets.

 Second-quarter 2009 production averaged 60,100 barrels of oil equivalent (Boe) per day, a decrease of 1 percent from the first quarter due to a planned 16-day platform turnaround in May. Excluding the turnaround, production would have been up 1,226 Boe per day net.

At the close of the second quarter, the Forties Field was producing at sustained rates in excess of 70,000 barrels per day (Bpd), the field’s highest stable production output since February 2006. Production efficiency for Forties averaged 93 percent during the second quarter, representing a 37 percent field-wide gain since our acquisition in 2003.

During the second quarter, four successful oil development wells were completed contributing 2,740 Bpd for the quarter. The FC 6-3 well, which encountered 34 meters of pay, was brought on production in mid-June at 10,500 Bpd, the field’s highest initial rate since 1994.

We are currently drilling one development well, FA 4-2, and completing an additional successful oil development, FC 5-4), which will be on production in August.